1) Under its executive stock option plan, JB Corp. granted options on January 1, 2016, permitting executives to purchase 200,000 shares of the companys $1 par common stock within the next eight years, but not before December 31, 2019 (the vesting date). The exercise price is set at the stocks market price on the date of grant, $20 per share. The fair value of the options, estimated by an appropriate option pricing model, is $8 per option. At 12/31/16 100% of the options are estimated to vest, and the stocks market value is $24/share. How much compensation expense should be recognized in 2016?

$ 0

$ 200,000

$ 400,000

$1,600,000

2) Which of the following statements describes a defined benefit pension plan?

A pension plan where an employee is promised a specific periodic pension payment upon retirement based on a formula considering the employees earnings history, length of service, and age.

Investment risk is borne by the employee

The accounting is simpler than that for defined contribution plans

Retirement benefits are based on the amount an employee has accumulated in a retirement account

3) Under US GAAP, the projected benefit obligation (PBO) is increased by

An increase in the estimated life expectancy of employees.

Amortization of prior service cost.

An increase in the actuarys assumed discount (settlement) rate.

Actual return on plan assets that is lower than expected.